FIN 102 CBT PRACTICE

Phil July 3, 2024

0 662 1 minute read

Take your time to read instructions before taking this test.

There are 40 questions which you are to answer in 15 minutes that gives you roughly 30 seconds per question.

If you can get at least 60%, you can be rest assured that you’ll ace FIN 102 exam

In a normal exam you will be asked between 40 – 60 questions but I only arranged 40 questions

Note

Do not be in a hurry to answer the questions

Do not waste time on a question you don’t know

Move as fast as possible and starting with questions that don’t have calculation first to save time

Always crosscheck

Don’t be in a hurry to submit, you are not in a competition

Don’t be scared. Getting an A is easy

Don’t be over confident, you can end up a D, E or F. Calm your blood, no be only you sabi book

Please do well to use our comment box incase there’s a message you want to pass to us

70 – 100 A

60 – 69 B

50 – 59 C

45 – 49 D

40 – 44 E

0 – 39 F

I wish you success

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FIN 102

1 / 40

1. What is 'compound interest'?

A. Interest paid on the initial deposit and any accumulated interest from previous periods

B. Interest that does not accumulate over time

C. Interest that decreases over time

D. Interest paid only on the initial deposit

2 / 40

2. What is the decision rule for the Profitability Index (PI)?

A. Accept projects with a PI greater than 1

B. Accept projects with a PI less than 1

C. Accept projects with a PI equal to 1

D. Reject all projects regardless of PI

3 / 40

3. What does the 'time value of money' imply?

A. Money should only be invested for short periods

B. Money can earn interest over time, increasing its future value

C. Money loses its value over time regardless of interest

D. The value of money is not affected by time

4 / 40

4. Which of the following is an advantage of investing in real assets?

A. High liquidity

B. Provides a hedge against inflation

C. Low transaction costs

D. Dependent on financial market volatility

5 / 40

5. Which of the following best describes probability?

A. The degree of certainty that an event will occur.

B. The estimation of potential losses in an investment.

C. The measure of the likelihood that a particular event will occur.

D. The degree of uncertainty in a financial decision.

6 / 40

6. What is the primary definition of investment according to Wikipedia?

A. Keeping money in a savings account without interest

B. Spending money on consumables

C. The dedication of money to purchase an asset to attain an increase in value over time

D. The purchase of luxury goods for personal enjoyment

7 / 40

7. Which of the following is NOT a type of asset?

A. Intanginble Asset

B. Liquid Asset

C. Imaginary Asset

D. Fixed Asset

8 / 40

8. Which of the following best describes speculation?

A. A long-term investment strategy

B. A guaranteed method for achieving stable returns

C. The practice of saving money in a bank account

D. A short-term, high-risk financial transaction with potential for substantial gain

9 / 40

9. Which of the following is NOT a cause of uncertainty in a business environment?

A. Trade Barriers

B. Technological Changes

C. Customer needs

D. Fixed Return on Investments

10 / 40

10. Which type of risk is inherent in an economy and common to all industries, and cannot be eliminated by diversification?

A. Systematic Risk

B. Business Risk

C. Unsystematic Risk

D. Liquidity Risk

11 / 40

11. What is the formula for the Coefficient of Variation?

A. Standard Deviation / Expected Value

B. Expected Value / (Standard Deviation)²

C. (Standard Deviation)² / Expected Value

D. Expected Value / Standard Deviation

12 / 40

12. What is one of the primary disadvantages of speculation?

A. It ensures steady income

B. It guarantees high returns

C. It can lead to market manipulation and artificial price changes

D. It minimizes the risk of price fluctuations

13 / 40

13. Which method converts uncertain cash flows to certainty-equivalent cash flows using an estimated certainty equivalent coefficient?

A. Sensitivity Analysis Method

B. Risk-Adjusted Discount Rate Method

C. Certainty Equivalent Method

D. Expected Net Present Value Method

14 / 40

14. Which method involves calculating the time it takes to recoup the initial capital invested in a project?

A. Expected Net Present Value Method

B. Sensitivity Analysis Method

C. Standard Deviation Method

D. Payback Period Method

15 / 40

15. What is an asset?

A. A resource with economic value that an individual, corporation, or country owns or controls with the expectation of providing a future benefit

B. A resource with no economic value that an individual or corporation controls

C. A resource that always generates cash flow immediately

D. A resource that decreases expenses but does not generate cash flow

16 / 40

16. How is risk different from probability?

A. Risk is a measure of certainty, while probability is a measure of uncertainty.

B. Risk is always expressed as a number between zero and one, while probability is not.

C. Risk measures the likelihood of an event, while probability measures potential loss.

D. Risk measures potential loss, while probability measures the likelihood of an event.

17 / 40

17. Which type of speculative transaction involves earning profit from price differences of a security in two different markets?

A. Arbitrage

B. Margin Trading

C. Blank Transfer

D. Cornering

18 / 40

18. What does 'liquidity' refer to in investment terms?

A. The amount of profit an investment makes

B. The ease of converting an investment to cash

C. The level of risk involved in an investment

D. The potential for capital appreciation

19 / 40

19. What is an example of a social factor that can influence investment opportunities?

A. Technological Innovation

B. Fiscal Policy

C. Aging Population

D. Exchange rates

20 / 40

20. Which of the following measures the dispersion of cash flows of a project from its mean value?

A. Certainty Equivalent Method

B. Standard Deviation

C. Coefficient of variation

D. Payback period

21 / 40

21. Which type of investment represents ownership in a company?

A. Mutual Funds

B. Real Estate

C. Stocks

D. Bonds

22 / 40

22. In the evolution of investment analysis and management, which period is known as the Pre-scientific Era?

A. 1880-1952

B. 1980-date

C. 1900-1950

D. 1952-1980

23 / 40

23. Which of the following is a common investment goal?

A. Avoiding any form of financial planning

B. Spending all earnings

C. Buying daily groceries

D. Accumulating retirement funds

24 / 40

24. Which of the following is NOT a type of investment?

A. Stocks

B. Government Bonds

C. Real Estate

D. Speculative Short-Selling

25 / 40

25. Which type of financial asset involves a legal document that states the money lent, the amount to be paid back plus interest, and the bond’s maturity date?

A. Certificate of Deposit (CD)

B. Stocks

C. Derivatives

D. Bonds

26 / 40

26. Which type of risk refers to the potential loss of value in a bond due to changes in interest rates?

A. Volatility Risk

B. Inflation Risk

C. Interest Rate Risk

D. Business Risk

27 / 40

27. Which of the following methods considers the time value of money?

A. Net Present Value (NPV)

B. Accounting Rate of Return (ARR)

C. None of the options

D. Payback Period Method

28 / 40

28. Who is a 'Bear' in the context of speculators?

A. A speculator who anticipates a rise in the price of securities

B. A speculator who anticipates a fall in the price of securities

C. A speculator who holds long-term investments

D. A speculator who applies for new shares to sell at a premium

29 / 40

29. Which of the following is NOT considered an element of the investment environment?

A. Market intermediaries

B. Political stability

C. Assets and investment vehicles

D. Financial markets

30 / 40

30. Which of the following is NOT a common investment goal?

A. Accumulating retirement funds

B. Immediate consumption of goods

C. Enhancing current income

D. Saving for major expenditures

31 / 40

31. Which of the following factors should be considered before investing?

A. The color of the investment certificate

B. The security of the capital invested

C. The length of the investment name

D. The popularity of the investment among friends

32 / 40

32. What is the relationship between risk and return in investments?

A. Higher risk always results in lower return

B. Risk and return are unrelated

C. Higher risk is directly associated with higher potential return

D. Lower risk results in higher return

33 / 40

33. Which of the following best defines risk in a financial context?

A. The chance that an outcome or investment's actual gains will match the expected outcome.

B. The variation in the outcomes that could occur over a specified period.

C. The guaranteed profitability of an investment.

D. The certainty of receiving a fixed return on an investment.

34 / 40

34. What is the key characteristic of unsystematic risk?

A. It includes risks such as exchange and interest rates.

B. It is common to all industries and cannot be reduced.

C. It affects the entire economy and cannot be controlled.

D. It is insurable and can be reduced by means of portfolio diversification.

35 / 40

35. Which of the following is NOT a limitation of the Payback Period Method?

A. It gives equal weight to returns of equal amounts even if they occur in different time periods

B. It does not consider the time value of money

C. It fails to measure the profitability of an investment project as it does not consider all the cash inflows after the payback period

D. It requires complex calculations and is difficult to understand

36 / 40

36. Which of the following is NOT an economic factor affecting investment?

A. Gross Domestic Products(GDP)

B. Consumer Confidence

C. Interest Rates

D. Political Stability

37 / 40

37. What is risk in a business context?

A. The likelihood of a business achieving all its targets.

B. The chance of achieving profits above target levels.

C. The certainty of generating high profits in the long term.

D. Anything that threatens an organization's ability to generate profits at target levels.

38 / 40

38. What is the probability that a fair coin will come up heads in a single toss

A. 0.75

B. 1.00

C. 0.50

D. 0.25

39 / 40

39. Which of the following statements is true regarding probability?

A. The closer the probability is to zero, the more likely the event will occur.

B. Probability can only be expressed as a whole number.

C. Probability is always expressed as a number between zero and one.

D. The closer the probability is to one, the less likely the event will occur.

40 / 40

40. What distinguishes real assets from financial assets?

A. Real assets do not include natural resources

B. Real assets are intangible, while financial assets are tangible

C. Real assets have intrinsic value, while financial assets derive their value from a contractual claim

D. Real assets are always more liquid than financial assets

Your score is

The average score is 64%

Phil July 3, 2024

0 662 1 minute read

Phil
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FIN 102 CBT PRACTICE

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